Winds of Change

Airborne Energy is being Harnessed to Meet the West's Power Needs

By Lisa Cohn

In the early 1970s,
Oregon meteorologist Bob Baker began an intense search for a valuable
natural resource: wind. He and other researchers at Oregon State
University traveled by helicopter and four-wheel drive, combing the
Northwest for wind-rich ridgetops and wheat fields that could serve as
homes for wind farms.

They prospected in agricultural
towns with names such as Touchet, Helix and Wallula, seeking trees deformed by
gales and grasses flagged by breezes. They interviewed farmers who shared
tales of gusts blasting screen doors open and storm winds ripping past feeding
troughs.

By the end of the decade, the
researchers had found nearly 30 "sweet spots"-sites with average wind speeds of
at least 17 MPH and proximity to power lines- where windmills could transform
gusts, gales and breezes into nonpolluting electricity. These promising
wind-kissed sites included a long grassy bluff near Goldendale, Washington; a
ridge southwest of Kennewick, Washington, at the crest of Horse Heaven Hills;
and grazing land on the Blackfeet Indian Reservation east of Glacier National
Park.

With funding from the
Portland-based Bonneville Power Administration -a federal agency that markets
electricity from 31 Northwest dams and several power plants -the OSU researchers
installed meteorological equipment at all of the sweet spots and also at
promising sites where wind speeds averaged at least 15 mph. From 1975 to
1986, they gathered data from more than 50 locations, documenting what their
intuition already told them: Parts of the Northwest were among the windiest
landscapes in the nation.

And yet, for years, the winds
streamed largely unharnessed over most of the region. "We collected the
information and published reports, but they sat idle because the Northwest had
ample hydroelectricity, and the price was low," Baker says.

As part of a test program,
Bonneville Power did spend more than $2 million to lease a south-central
Washington site from 1980 to 1986 for operation of three experimental turbines
whose construction was funded by the Department of Energy.

Put simply, turbines produce
energy through the following process, explains the DOE: When the wind blows, it
turns the blades, which spin a shaft, which connects to a generator that changes
mechanical energy into electrical energy.

The experimental turbines were
two-bladed machines, which, from bladetip to bladetip, stretched the length of a
football field, says Ron Holeman, a retired BPA engineer who was active in early
efforts to develop renewable energy.

"From those trials we learned
that the best turbines have shaft-and-rotor assemblies that rotate at variable
speeds, picking up speed or slowing down based on the speed of the wind.
The early turbines were designed for rotors to spin at a set speed. For
instance, some had jointed bladetips whose ends pivoted in response to wind
flow, blocking or embracing the wind to keep the rotor at a consistent speed.
They were mechanically complex and subject to breakdown."

When the BPA ended its testing
in 1986, the agency didn't actively pursue wind power again until 1992, when it
solicited wind-project proposals. The call for proposals resulted in development
of a project near Laramie, Wyoming, from which the BPA agreed to buy 15.3
megawatts of power. Owned by PacifiCorp, a Portland-based utility, and the
Eugene (Oregon) Water & Electric Board, the project came online in 1999.

Power is described by how much
energy is produced at any given time, and is usually expressed in number of
kilowatts per hour. A megawatt equals 1,000 kilowatts an hour. Every megawatt of
wind power generates enough electricity to serve approximately 250 homes a year,
so 15.3 megawatts was enough to provide power for nearly 4,000 households.

That's about 4 percent of the
Northwest households that can be served by wind energy today. Windpower
production has increased dramatically in the Northwest over the past two years,
thanks largely to a drought that spiked traditional power prices during the
winter of 2000-2001, and partly due to groundwork laid throughout the West by an
enterprising California company, U.S. Windpower.

U.S. Windpower was formed in San
Francisco in 1974 on the heels of the 1973&-1974 Arab Oil Embargo, which led to
long lines at U.S. gas pumps. The company focused on research and development
for many years, building just a small wind project, in New Hampshire, in the mid
1970s. Although U.S. Windpower was based in California, the company originally
envisioned the East Coast as its strongest

market. It changed direction in
1980 after another international event led to especially high electricity prices
in California.

After the Shah fled Iran in
January 1979, oil production was greatly reduced in the Mideastern country,
causing a huge drop in world supply. Oil-consuming nations were using 2 million
barrels a day more than was being produced, and the Carter administration began
programs to encourage development of alternative forms of energy.

California's rapidly growing
population had made the state particularly oil-dependent and vulnerable to
fluctuations in supply. It was eager to reduce its dependence, and by 1981, U.S.
Windpower had contracts lined up with several Golden State utilities. The
company became one of the earliest developers of wind power at Altamont Pass,
near San Francisco.

"We agreed to install wind
plants that would produce about 500 megawatts. These were $500 million deals,"
says Barrett Stambler, who was a recent Yale University business school graduate
when he joined the company as manager of power contracts in 1986. Shortly after
he arived, U.S. Windpower--which was expanding throughout the United States and
Europe--changed its name to Kenetech Windpower, a play on the idea of kinetic
energy, which is generated by motion.

It was also clear that the
utility industry was moving toward deregulation (which began occurring
state-by-state in the late 1990s), so utilities wanted to gain experience
offering alternative products before they were faced with competitors that did
so, Stambler says.

In the Northwest, surging
populations and increasing energy demand in Washington and Oregon prompted
utilities to explore renewable-energy projects, and Stambler began knocking on
Northwest utilities' doors in 1990 to tell them about Kenetech. In 1993, the
company opened a Northwest office, and hired Bob Baker away from Oregon State,
sending him into the Northwest's agricultural communities to convince farmers to
lease their lands for power projects.

Stambler's enthusiasm and
Baker's knack for befriending farmers reaped rewards. A number of utilities,
including PacifiCorp, Portland General Electric, Puget Sound Energy and the
Snohomish Public Utility District, agreed to purchase wind power from Kenetech,
and by 1994, Kenetech also had a good start on the land it needed to create
Northwest wind farms.

Contracts were signed with
farmers and other landowners to lease 50,000 acres of arid ridgetops southwest
of Walla Walla, Washington, along the Washington-Oregon border. The company
planned to use the land for a giant wind plant that would produce 300 megawatts.

But technical problems arose.
The company had faced a series of design and mechanical problems over the years,
and in Texas and California, blades began flying off Kenetech turbines in high
winds. The company couldn't raise enough money to correct the problem and had to
declare bankruptcy. In 1997, FPL Energy—owned by FPL Group, and a sister company
to Florida Power & Light--bought Kenetech's equipment, wind data, permitting
studies and leases. Despite its demise, Kenetech did pioneering work to
bring wind power to the West, says Stambler, who is now director of renewable
business development for Portland-based PacifiCorp Power Marketing­PPM-which
sells power to Northwest utilities. "Wind power had begun to take hold in the
Northwest, and Kenetech was largely responsible for that," he says.

Today, the Northwest is one of
the country's leading areas of windpower development. FPL Energy decided to
continue, and even expand, the Walla Walla Valley project, which it named the
Stateline Wind Energy Center. Construction began in January 2001, and 399
turbines now snake along high-desert land peppered with bunchgrass and thistle.
Stateline produces 263 megawatts a year, and construction is under way to boost
that to 300 megawatts, making Stateline the world's largest wind farm operated
by a single owner. Wind farms may contain clusters of turbines from many
different owners, and the various developers that succeeded Kenetech at Altamont
have collectively grown the wind farm into the Second-largest
windpower-producing site on the planet, generating a total of nearly 550
megawatts, according to the American Wind Energy Association. Another California
location, Tehachapi, in the mountains southeast of Bakersfield, is the world's
largest wind farm, at 620.19 megawatts.

PacifiCorp Power Marketing-a
subsidiary of Glasgow-based ScottishPower, which also owns PacifiCorp, the
Portland utility-is selling the Stateline project's wind power to Northwest
utilities and to the BPA, which is purchasing 90 megawatts. "We have big
aspirations for wind power," says PPM spokeswoman Jan Johnson. "Our goal is to
add 2,000 megawatts to our total portfolio over the next five to seven years,
with much of that generated here in the West."

Since the late 1990s, other
developers and utilities have built, or announced plans to build,
wind-generating units on many of the sweet spots identified by Bob Baker and
other meteorologists. If all the proposed projects are completed--seven are up
and running, and 13 are in the planning-and-development phase--the electricity
they harness from the wind will yield about 1,650 megawatts by 2004, enough to
power more than 412,000 homes a year, says Rachel Shimshak, director of the
Renewable Northwest Project, a Portland nonprofit organization that promotes
development of renewable energy.

Windpower activity is growing so
rapidly in the Northwest, it attracted the attention of Denmark-based Vestas
Wind Systems, a leading manufacturer of windpowered turbines. In July Vestas
moved its North American headquarters from Palm Springs to Portland, and the
company has said it may build a turbine-manufacturing plant in the Northwest.

"Two years ago, the Northwest
had about 100 megawatts of wind power online," Shimshak says. "Today, we have
four times that much. In two years we could have 1,000 megawatts. The Northwest
is a terrific place to develop wind, with available land, decent wind and
willing buyers. And we have the most diverse group of wind-energy projects
anywhere in the country."

Windpower developers include
Energy Northwest, a Richland, Washington-based consortium of 17 public utilities
that operates the Columbia Generating Station nuclear plant north of Richland,
she says. In September, Energy Northwest completed a 37-turbine, 48-megawatt
wind plant on wheat farms near Kennewick, and eight public utilities in
Washington are buying the power.

Even the owner of two aluminum
plants is developing wind energy, Shimshak says. In January, Golden Northwest
Aluminum, based in The Dalles, Oregon, completed a 24-megawatt wind plant in
Klondike, in North-central Oregon, and has been selling the wind energy to the
Bonneville Power Administration.

Golden Northwest decided to
develop the wind plant after energy prices skyrocketed two years ago when the
Northwest experienced the second-worst drought on record and the West Coast
wholesale-power market was in disarray thanks to utility deregulation problems
in California. In December 2000, the 1,200­employee company-whose two plants
were using around 600 megawatts of power-shut down its aluminum operations,
deciding it could make more money by developing new power sources than it could
by making aluminum. It worked with the BPA to sell the power Golden Northwest
would have used, and had contractual rights to purchase, and invested the
proceeds in energy-generation projects such as the wind-power plant, says Allen
Barkley, general manager for Golden Northwest's wind-power subsidiary,
Northwestern Wind Power.

Golden Northwest's arrangement
with the BPA helped keep the company alive, and this past September, CEO Brett
Wilcox announced that Golden Northwest expects to restart a portion of one of
its aluminum plants, rehiring 75 people and adding them to the ranks of the 355
people employed by energy development and sales. As part of its effort to
survive in the challenging aluminum market, the company is also developing
clean-burning natural-gas-fired plants to help meet its aluminum-production
needs. Together, Golden Northwest's power projects will generate 844 megawatts,
Barkley says.

Shimshak notes that Northwest
energy shortages not only affected companies such as Golden Northwest Aluminum,
they also concerned consumers, further spurring interest in wind power. During
winter 2000 and spring 2001, wholesale power prices jumped from as little as $25
per megawatt-hour to as high as $1,000 per megawatt-hour, with prices sustained
at more than $200 per megawatt-hour for several months during that period.
Suddenly, wind power, at $30 to $50 per megawatt-hour, was more than competitive
with traditional sources of electricity.

Wind-power developers descended
on the Northwest and vied for the right to lease wind-blown agricultural lands
in Washington, Oregon, Montana and Wyoming. But although these developers were
tying up the land in case they wanted to use it, the market for wind power was
still uncertain. The guts and gamble of PacifiCorp Power Marketing gave at least
one company the confidence to go ahead with a major project.

In November 2000, PPM approached
FPL Energy and committed to buy all the wind power produced at the Stateline
project-which at that point consisted of little more than plans on paper. PPM
would take the risk of trying to sell the power to utilities.

"We said, `We'll create a market
for this power,' " says Stambler. "Our goal is to make wind power a core
energy alternative for the region, to make wind a mainstream source of power."

With its financial exposure
minimized, FPL Energy proceeded with the precedent-­setting Stateline project.
PPM is happy with how things have turned out. Since July 2001, when Stateline
began producing energy from its first turbines, PPM has sold virtually every
megawatt through long-term contracts with customers such as the BPA,
Spokane-based Avista Utilities and the Eugene Water & Electric Board, Stambler
says. "That means that wind energy, once viewed as a `boutique' item, has
successfully competed directly with other, traditionally less expensive sources,
such as hydroelectricity," he says. PPM CEO Terry Hudgens agrees. "Our
wholesale-mostly utility-customers say, `Bring us more,' and so we are."
One of Hudgens' customers is Seattle City Light, which was hit hard by spiraling
wholesale-power-market prices between November 2000 and March 2001.

While hydroelectric power has
low production costs, its availability is variable and unpredictable, says
Seattle City Light superintendent Gary Zarker. When the Northwest experienced
its record drought, the utility was forced to buy much more wholesale power than
usual to meet customer demand. Since wholesale prices were consistently 10 times
their normal levels, the utility had to borrow nearly $300 million and also
implement surcharges that by the end of the winter totaled 58 percent more than
traditional costs, Zarker says.

No one was happy. The utility
decided to take steps to make it unnecessary to buy wholesale power even in a
drought. By October 2001, it had not only boosted the amount of hydroelectricity
it contracted to receive from the BPA, it had also arranged to purchase power
from a gas-fired electricity plant, and it had added wind power to its energy
portfolio. Seattle City Light is buying 100 megawatts of wind power from PPM and
may increase that to 125 megawatts by August 2004.

"With our current portfolio, we
even have surplus energy to sell nearly every month of the year under nearly any
water conditions," Zarker says. "Now we're the ones selling power on the
wholesale market. The revenue from those sales-expected to be $100 million this
year-is helping us pay off the debt we accumulated during the crisis."

The Bonneville Power
Administration has now jumped into clean energy with similar enthusiasm. Since
1999 it has more than doubled, to 34 megawatts, its wind-power purchases from
the Wyoming wind project. It has added the 90 megawatts from Stateline and
the 24 megawatts from Northwestern Wind Power's Klondike project, and it is also
purchasing 50 megawatts from a project in the north­central Oregon town of
Condon. That brings BPA wind-power purchases to a total of 198 megawatts,
serving around 49,500 households a year. The agency is considering additional
wind projects that could serve about 158,000 households, says George Darr,
manager of the BPA's renewable-energy program.

"To make sure our energy
portfolio in the region is well-balanced, we made a decision to aggressively
pursue the most environmentally acceptable resources available," says BPA
spokesman Ed Mosey.

The BPA, along with PacifiCorp
Power Marketing, has been key to the growth of wind power in the Northwest, says
Shimshak from the Renewable Northwest Project. "As purchasers of wind power,
PacifiCorp Power Marketing and the BPA are making the market happen."

Even though Northwest energy
shortages have abated for now, interest in developing new clean­ power sources
has not, Shimshak says. "It's difficult in a region with a power base of
hydroelectricity to determine when you have shortages and when you have plenty,
because the hydroelectric system's output changes with the amount of rain the
region receives, and supplies are also affected by how much power we can
purchase from California during the winter."

One of the main challenges of
developing wind power is integrating it into the transmission system-the poles
and wires that transport electricity, she says. Because the wind does not blow
all the time, the electricity it produces is intermittent compared with
electricity produced from traditional sources. This makes it difficult for
transmission­ system operators to plan how much wind energy will be traveling
the lines at any given moment, so they often impose penalty charges if
wind-power plants fail to produce as much electricity as scheduled.

Federal tax credits for
wind-power production, along with sales-tax exemptions in some states such as
Washington, have helped offset the cost of the penalties, says PPM's Stambler,
and the cost of generating wind energy has fallen thanks to technological
improvements such as larger, more efficient turbines and better blade design.

The cost of producing renewable
energy has dropped from about 12 cents per kilowatt-hour in the early 1980s to
as little as 3.5 cents to 5 cents per kilowatt-hour today, says Ron Holeman, the
retired BPA engineer. That's without transmission penalties, which in some cases
are minimal but in others add more than 10 percent to the price, Stambler says.
But because PPM has signed 20- to 25-year contracts with utilities, the price of
wind is like a fixed-rate mortgage for them, he says. The price doesn't go up.

In contrast, some suppliers of
hydroelectric power include adjustment clauses even in long-term contracts.
Hydropower may also vary widely based on the producer. Power a utility gets from
a project it owns may cost less than four-tenths of a cent per
kilowatt-hour-less than $4 per megawatt-­hour-during the same period an outside
supplier is charging $30 a megawatt-hour to cover indirect expenses and provide
a return to investors.

The price of electricity from
gas-fired plants is even more variable. It is often indexed to current gas
prices. If gas prices are falling, not having a fixed price may be good. If gas
prices are soaring, not having a fixed price may be bad. In early October,
gas-fired electricity was 4 to 4.5 cents per kilowatt-hour, Stambler says. "If
gas-fired electricity is 3.5 to 5 cents per kilowatt-hour, and wind isn't much
more expensive-or is even cheaper-isn't it prudent to have a chunk of wind power
in an electricity portfolio?" he says. "The price of wind power will continue to
be in the 3 cents-per­kilowatt to 5 cents-per-kilowatt range even if the
Northwest experiences power shortages again and other prices skyrocket to 50
cents per kilowatt-hour or more."

However, for both wind and
hydroelectric power, even if the price is locked, the supply a utility receives
is not, says Darr from the BPA. A wind or water drought may mean projects can
supply less power than anticipated, compelling utilities to make up the
difference from other sources in their power portfolios, or to buy power on the
wholesale market. That's why a diversified portfolio makes sense, he says.

Although historical data on wind
droughts is limited, it appears that no droughts have occurred in the West for
at least 20 years, Stambler says, and he believes the varied locations of wind
farms help to even out overall flow, since the wind may be strong in one place
when it's weak in another.

The 3 to 5 cents per
kilowatt-hour he cites for wind power is the cost to generate the power. The
retail cost that utilities charge customers must factor in overhead, just as
utilities do in setting prices for power produced by traditional sources. When
utilities offer wind power as green power, they also often ask customers to pay
extra to help fund new green-power projects and to help market green power to
encourage more people to use it.

A typical residential customer
of Portland General Electric uses 903 kilowatts of electricity a month and pays
$74.65 a month, says Mark Fryburg, a PGE spokesman. For 100 percent green power,
a typical residential customer pays about $7 extra per month. Customers also
have the option of paying an extra $3.50 a month to purchase just 100 kilowatts
of "clean wind." The utility funnels a portion of the extra money into acquiring
new renewable-power sources.

PGE began offering renewable
power in January 2000, and more than 15,500 residential customers now purchase
renewable energy, which includes a mix of wind power and geothermal power, with
about half the mix being wind.

"Our customers tell us they want
to buy renewable energy because it fits their values," says Thor Hinckley, PGE
manager of renewable-power programs. "People in the Pacific Northwest are
especially interested in environmental protection and creating a sustainable
future."

A typical Oregon household
buying a combination of wind- and geothermal-generated electricity supplied by
Green Mountain Energy a Texas company that provides power to utilities such as
Portland General Electric, can reduce carbon dioxide pollution from fossil-fuel
electricity generation by nearly 1,750 pounds a year, says Green Mountain
spokeswoman Marci Grossman. "That avoids as much carbon dioxide as not driving a
car almost 2,000 miles."

About 23 Northwest utilities now
offer customers clean-energy choices, says Shimshak from the Renewable Northwest
Project, including smaller utilities such as Ashland Electric and Orcas Power
and Light.

In March, a restructuring law
took effect in Oregon that requires Privately owned utilities to channel 3
percent of their annual retail sales revenues into efforts that support energy
efficiency and renewable­energy development. California passed a similar law in
1996 to earmark up to 3 percent of private-utility retail revenues for programs
such as renewable energy, and Montana passed a law in 1997 requiring its private
utilities to devote 2.4 percent of retail revenues to programs such as
conservation and renewable energy. In 2000, Washington passed legislation
requiring most utilities public and private-to offer green-power programs to
customers.

Use of wind power not only
generates green energy, it's also proving to be a boon to wind-blown
agricultural communities that have become homes for wind farms. In Walla Walla
County, Washington, for instance, tax payments from Stateline wind project
developer FPL Energy are expected to total $1.8 million this year, providing
funds for essential services such as schools, libraries and emergency medical
services, says Larry Shelley, county assessor. FPL Energy has become the
country's second-largest taxpayer, he says.

There may even be opportunities
to generate money from wind-power-related tourism. "The Port of Walla
Walla has already received phone calls from people who would like to get tours
of the projects," says Jim Kuntz, Port of Walla Wall executive director.
"It's one more tourism activity for people considering coming to the Walla Walla
Valley."

In economically depressed
Gilliam County in north-central Oregon, wind-project construction workers filled
vacancies in hotels and motels last year as San-Diego-based SeaWest WindPower
installed 83 turbines on a knoll of wheat fields near Condon. SeaWest,
whose power is purchased by the BPA, is expected to pay approximately $550,000
in property taxes each year, says Betsy Pattee, planning director for Gilliam
County.

The Northwest's farmers and
ranchers are also reaping benefits from the wind rush. Developers provide
handsome payments to landowners willing to provide a home on their land for
turbines. Landowners typically receive a percentage of wholesale sales
from wind generated on their property, with payments averaging more than $2,000
per turbine per year, Stambler says. That's good news for farmers who have
been struggling to keep their farms afloat.

Agriculture isn't easy in the
Walla Walla silt loam that makes us the gusty ridge 1,200 feet above the floor
of the Walla Walla Valley, say Royal Raymond, a farmer based in Helix, Oregon.
Water is a precious commodity along the ridge, where residents must dig 300 to
1,000 feet to meet their water needs, so Raymond, whose grandfather homesteaded
the property in 1878, specializes in dryland wheat farming.

Over the years, as wheat prices
have dropped, many of his neighbors have given up and sold their property to
Raymond's family. But thanks to hosting more than 25 turbines from FPL
Energy's Vansycle Ridge Project based in Oregon, near the Stateline project
Raymond has been able to survive. The turbines were built on his property
in 1998. "There is quite a bit more income, from 15 acres of

electricity production, that we
could have gotten from wheat," he says. "This enables us to continue to
farm. It's nice to be able to continue doing what you and your family have
been doing for generations."

In the sagebrush country of
Touchet, in eastern Washington, Shirley Hindman likes to watch the cattle
grazing under the 165 wind turbines on her family's property. When FPL
Energy began installing Stateline-project turbines in February 2001, Hindman
wondered how she'd fell about the blades swishing day and night. She liked
to be along with nature. But she's grown accustomed to the "foof, fof"
sound the machines, and has come to enjoy watching the way they rotate, almost
magically, to catch the wind.

In other parts of the country,
raptors and other birds sometimes flew into the older turbines because the birds
could not see the blades, but new larger, slower-turning blades that are angled
at the tip have reduced the problem significantly. While this aspect of
wind farms remains some what controversial, Hindman has not seen any birds fly
into the turbines on her farm.

She plans to use her family's
lease payment to rid the farm and surrounding lands of yellow star thistle, a
nasty weed. She wants to return the land to its natural condition and
encourage the growth of native sagebrush, grasses and wildflowers along the
ridge. FPL Energy has committed to help, at no charge, and this fall,
employees worked on weed control and reseeding the area with native plants.

"Unless you are rich, this is
the only way to restore the land," Hindman says.

Even if restoring the land means
altering the skyline forever, that's OK, she says. The 165-foot towers now
dominate the horizon, their 77-foot-long blades cutting a pathway 154 feet in
diameter across the sky. "Without the weeds, even with the wind towers,
the land will be better served," Hindman says. "Native plants will have a
chance to survive."

And she values what wind-power
development has done for her community. Many previously unemployed workers
now have jobs helping to monitor and maintain area wind farms. "This has
been a benefit for everyone," she says. "The turbines don't hurt the
environment. They don't have any poisonous by products. How could
anyone help but be excited by this?"